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In broad terms, section 144 of the Inheritance Tax Act 1984 (IHTA 1984) confers relief from inheritance tax where property comprised in a person's estate is settled by their Will on discretionary trusts and within the period of two years after their death there is a distribution out of the settled property.
Relief under IHTA 1984, s 144 is subject to the following conditions:
property comprised in the deceased's estate must be settled by Will. For this purpose, the property comprised in the deceased's estate falls to be determined in accordance with IHTA 1984, s 5 without the modifications which apply for the purpose of IHTA 1984, s 142
property must cease to be relevant property. IHTA 1984, s 144 applies in relation to any event which (apart from that section) would give rise to an 'exit' charge under IHTA 1984, s 65
the distribution must take place within two years of death. Like the two-year time limit for the purpose of IHTA 1984, s 142, this is a rigid time limit and HMRC have no express statutory discretion to extend it
no intervening immediate post-death interest or disabled person's interest. For deaths on or after 22 March 2006, IHTA 1984, s 144 does not apply where an immediate post-death interest (IHTA 1984, s 49A) or disabled person's interest (IHTA 1984, s
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